George Osbourne, Chancellor of the Exchequer, gave his budget speech to Parliament on the 18th March 2015. This budget is set by HM Treasury for the revenues to be gathered by HM Revenue and Customs and the expenditures of the public sector, in compliance with government policy.
Making Tax Returns Simpler and Online
A tremendous change for the self-employed is the introduction of an online tax return system. At the moment you must fill in and submit your tax return by 31st January.
By the new method, self-assessed tax returns can be managed in stages throughout the year, giving you the opportunity to see how much you owe and to pay at a time in the year that suits you.
The first online accounts will be available from 2016 with the system rolled out for all tax payers by 2020. Many umbrella companies already have an online system in place and so they are able to help streamline the process.
The end of the annual tax year means individuals and business will need to “pay the right tax at the right time“. This means that if you rely on the interest earned from tax money you’ve put away, you may need to reevaluate your sources of finance. The Treasury will now benefit from this interest, known as a stealth tax. This form of tax levied by the government which normally goes unnoticed by the public, such as tax on fuel, cigarettes.
Goodbye Class 2 National Insurance
The self-employed make Class 2 National Insurance contributions to qualify for benefits such as the State Pension. In the next parliament this is to be scrapped; details of timings, etc will take place later in 2015.
Although few details have been announced, the self-employed will continue to pay Class 4 NIC which will subsequently be reformed to include a contributory benefit test.
To Claim Working Tax Credit, You’ll Have to Demonstrate that Your Self-Occupation Is ‘Genuine and Effective’
Working Tax Credit is designed to help low-paid workers. However, some people appear to be abusing this and so the Government will be taking stronger actions.
If you’re self-employed and claiming this benefit, as well as being registered as such, you’ll have to show your work is ‘genuine and effective’ and that it’s ‘commercial’ and ‘profitable’ – or working towards that goal.